Wheat buyers fret as Canadian grain monopoly ends

Tue May 8, 2012 12:51pm EDT
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By Rod Nickel

WINNIPEG, Manitoba (Reuters) - Global wheat importers fear the quality of Canada's prized spring wheat and durum may deteriorate once the Canadian Wheat Board loses its marketing monopoly, creating problems for makers of breads and pasta.

A broad swath of wheat buyers, including Japan, known as the most quality-conscious wheat importer, has raised concerns that the consistent, top-quality wheat they have long bought from Canada may not be the same in the open market system, said Rex Newkirk, director of research and business development at the Canadian International Grains Institute (CIGI).

Canada is the world's biggest exporter of spring wheat and durum wheat.

"We trust Canadian wheat, so if we didn't have the quality we've had, it would be a catastrophe for us," Miguel Montalban, production manager of the Harinera La Espiga mill in Mexico City, told Reuters through an interpreter.

The Wheat Board has held a marketing monopoly over Western Canada's wheat and barley for export or human consumption for 69 years, but it will on end August 1 under a new Canadian law.

Wheat buyers will then buy Canadian wheat directly from grain handlers such as Glencore International PLC, assuming it completes its takeover of Viterra Inc this summer, Cargill Ltd and Richardson International Limited.

Eight Latin American wheat buyers, including Montalban, attended a week-long CIGI program in Winnipeg to study the properties of Canadian wheat.

The Wheat Board aimed to give farmers the highest possible returns, but also sought to keep buyers' loyalty by at times delivering better-quality grain than it was getting paid for, Newkirk of CIGI said.   Continued...

An ear of wheat is seen on the Canadian prairies near Lethbridge, Alberta, September 7, 2011. REUTERS/Todd Korol